The fund, says a Mint report, has a final target corpus of about $200 million (Rs1,300 crore), making it the largest ever impact venture capital fund to be raised for the Indian market. The fund’s target size underscores the long road that still lies ahead of impact venture capital funds to get to critical scale.

There isn’t any doubt that impact investors such as Aavishkaar have made tremendous progress over the past decade since venture capital as an asset class returned in earnest to this market. Over the last seven years, 2010-2016, impact investors have put $5.2 billion to work across 485 deals, according to a McKinsey & Co. report in September. It wasn’t until 2010 that impact investments in India started to gather momentum and the last two years have been quite exceptional. Investments touched the billion-dollar mark for the first time in 2015 and scaled to nearly $1.1 billion last year.

The McKinsey data, it is important to note, includes investments by an array of investors such as non-profits, foundations, private equity firms, mainstream venture capital firms and impact venture capital firms. Firms such as Aavishkaar, Lok Capital, Elevar Equity and Unitus Seed Fund would account for a portion of the overall capital invested over the last seven years in the impact sector. As an asset class, impact venture capital hasn’t grown with the same momentum as mainstream venture capital.

Mumbai-based Aavishkaar’s journey is instructive on how challenging it can be to be an impact venture capital firm in India. Founded in 2001, a time when venture capital was practically non-existent in India, the firm took a good seven years to raise its first fund—a modest $14.5 million. It has had better luck with its subsequent funds but fundraising remains a long drawn and difficult process. Aavishkaar went on the road to raise the current $200 million fund early last year and still has more than half the way to go to its final target.

The experiences of peers haven’t been much different. Delhi-based Lok Capital, which entered the market with a $22 million fund in 2006, started raising its third fund early last year. It raised commitments worth $40.5 million as part of the first close in June last year and is now nearing the final close at $100 million.

Impact venture capital firms such as Lok and Aavishkaar typically raise capital from development finance institutions (DFIs) and non-profits that share a similar purpose in terms of investment goals. They invest in for-profit impact enterprises addressing underprivileged and underserved consumers.

However, over the years, the allocations available from DFIs and non-profits, limited partners in industry parlance, haven’t grown in tandem with the needs of both impact venture capital funds and impact enterprises.

Both Lok and Aavishkaar, for instance, have had to change their fundraising strategies for their current funds and tap domestic limited partners. “Generally, our investors have been DFIs and we realized that their interest has moved on to other developing countries or continents like Africa,” Aavishkaar founder Vineet Rai told Mint in an interview this week.

About 50% of the $95 million Aavishkaar Bharat Fund has raised so far has come from domestic limited partners.

In the past, such investors accounted for just 5% of its funds’ corpus. While their growing presence is a welcome development, the base is still quite small. That makes the absence of global capital a bit worrisome.

According to the McKinsey report, 500 million people in India lack secondary education or skills training, 300 million people have no access to electricity and 120 million rural households are unbanked. Credit Suisse’s latest annual Global Wealth Report says more than 700 million people or 92% of India’s population have wealth worth less than $10,000.

That spells massive market opportunities for impact enterprises and impact venture capital firms. That also means that domestic capital alone will not suffice to meet the needs of the impact sector.

By contrast, mainstream venture capital firms have been able to attract unprecedented sums of capital. Last year, for instance, just three firms, Sequoia Capital, Accel India and Nexus Venture Partners drew $1.8 billion for new funds. Like impact venture capital firms, more than half the money in mainstream venture capital firms such as Sequoia and Nexus still comes from global limited partners such as corporate foundations, family offices, public pension trusts, university endowments and sovereign wealth funds.

Those limited partners are yet to bite into the impact venture capital asset class, though some of the mainstream venture capital firms that they back have lately started to venture into the space.

Despite all the challenges, most impact venture capital fund managers think India is now at a tipping point in terms of capital inflows into the asset class. “The floodgates are about to open,” Rai said a few months ago on the sidelines of an Aavishkaar conference in Mumbai.

A much-needed pointer to the need for scale could also come from The Rise Fund, an unprecedented $2 billion impact investment fund raised in October this year by San Francisco-based private equity heavyweight TPG Growth.

“India is our priority..,” TPG Growth founder and managing partner Bill McGlashan told Mint in an interview last month. Hopefully, limited partners will take their cues from there.

Snigdha Sengupta is a consulting writer with Mint. She contributes stories on venture capital and private equity.